Finding the right mortgage to meet your needs isn't an easy task - mortgages are as varied and unpredictable as the housing market itself. That's why it's important to know your options - and to know which mortgage type fits the life you live as well as the future you plan to live.

The best advice is to sit down with a mortgage lender to discuss your financial situation and find the mortgage that best fits it. In fact, even potential buyers who don't think they can qualify for a mortgage will be surprised at the number of mortgages and loans that can make homeownership a good possibility.

Here's a sampling of some of the most common types of mortgages on the market:

Fixed Rate
If you have a fixed rate mortgage, your interest rate won't change and, therefore, your monthly payments remain the same until the mortgage is paid off. The most common fixed rate mortgages are the 30 - year rate, which lowers the monthly payment but takes 30 years to pay off; or the 15 - year rate, which requires higher payments but saves interest over the life of the loan. During the early part of making payments, a large portion of the payment goes toward paying off interest. However, as more of the loan is paid off, more of the payment applies toward the principal.

Adjustable Rate
Unlike the fixed rate, which doesn't change, an adjustable rate mortgage allows the interest rate to change from time to time in order to keep up with fluctuating market rates. Although this type of mortgage might enable buyers to lower their initial payments, it also runs the risk of increasing payments if the market goes up. The process is almost like playing the stock market - it's risky, but could turn out in the borrower's favor if the market stays strong. Most experts recommend that a borrower only take this type of mortgage if it's certain that the salary will increase or if higher interest rates won't adversely affect a budget.

Government Loans
In an effort to support the housing market, both federal and state governments offer loans that generally cater to low -  to moderate - income buyers as well as first time home owners. Although the programs are great, it's important to apply for these loans as early as possible since funding may run low by the end of the year.
Government loans include:

• FHA Loan: Enables buyers to lower their down payments, but may have a maximum loan limit.

• VA Loan: Veterans who qualify for this program can buy a home with no down payment.

• RHS [Rural Housing Service] Loan: Offers low interest programs with no down payment.

Balloon Loans
This type of loan allows borrowers to get a low interest rate with shorter term financing (usually five, seven or 10 years). Once the term is over, the borrower must either refinance or pay off the balance of the loan. Some types of balloon loans have a feature that allows borrowers to convert to a fully amortizing loan set at the current interest rate.